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by Pádraic Gilligan | April 15, 2016

The world of the destination management company has been undergoing a radical change over the past 10 years. I wanted to say "kaleidoscopic" change but, on reflection, much of this change has not been pretty, muddying rather than clarifying the value proposition at the heart of such entities' offerings. Accordingly, there's been an existential angst in the soul of the DMC community, and it's not going away. In this context, last year's publication of a major research study by the Department of Hospitality & Tourism at the Isenberg School of Management, University of Massachusetts (UMass), was an important milestone for the DMC community, but I wonder if many of the companies actually read it.

Funded by the Incentive Research Foundation (IRF) and launched initially at the IRF Invitational last year by the inimitable Rodger Stotz, the IRF's chief research officer, the study is a meaty 58-page presentation. The title of the paper, Developing a new Business Model for DMCs by Redesigning Their Value Proposition, lays out the study's big ambition and high aim. UMass compared responses from DMCs to key questions about their value proposition with those of their clients (meeting planners). Qualitative research involved separate in-depth focus groups with DMCs and meeting planners, with the outcomes from these sessions tested in a quantitative field survey with a larger sample. The findings are somewhat limited by the small samplings involved in the survey and by UMass' lack of familiarity with the specifics of the marketplace but, regardless, there are interesting outcomes. Here are a few of them:

DMCs have high opinions of themselves

When evaluating their strengths, DMC responses to a series of statements — where 0 = "totally disagree" and 5 = "strongly agree" — ranged from a median value of 4.39 to 4.82, while meeting-planner scores across the same metric were 3.74 to 4.55. Both communities agreed that "local knowledge, expertise and networks" were a key DMC strength (rated 4.82 by DMC and 4.55 by planners). However, there were broad discrepancies across other characteristics rated as core strengths by DMCs. The biggest difference, interestingly, is in relation to "guarantee event satisfaction and client satisfaction," which DMCs rated 4.82 and believed was their most important strength, but planners only rated it at 3.74 (lowest by far). So DMCs are clearly not guaranteeing event satisfaction at anything like the levels they think they are.

DMCs have low self-esteem

The comparative scores evaluating weakness are, perhaps, even more interesting. There's clear agreement around some statements — both DMCs and planners concur, for example, that services supplied by DMCs and by meeting planners often overlap, and this is a weakness in the DMC value proposition. Meeting planners regard the tendency among DMCs to work repeatedly with the same vendors as a limiting factor for creativity and, therefore, identify this as a primary weakness. For DMCs, conversely, this is considered the least impactful weakness. Finally, for DMCs, a key weakness is their deeply rooted conviction that nobody understands them, that no value is to given to their role. Meeting planners strongly disagree with this, to the point that there's a nine-unit difference between their respective scores. There's a touch of the bleeding heart about this: DMCs are like the persecuted teenager who is convinced his parents and the world at large don't value or understand him.

Networks and consortia represent an opportunity for DMCs

Both planners and DMC respondents concur that "DMC networks are growing" and that this is an opportunity for DMCs. In fact, according to meeting planners in the field survey, this is the No.1 opportunity for DMCs. When the meeting planner focus group discussed the topic, apparently they expressed apprehension that "such alliances might standardize DMCs' offerings and, therefore, undermine the creativity of the individual DMC." However, they too could see the overall positive benefit for DMCs being part of a larger, more powerful organization, especially if that alliance could also educate the industry around the benefits of using a DMC.

DMCs are paranoid

When assessing threats, DMC are decidedly defensive, convinced that meeting planners are stealing their ideas. "Planners learn from DMCs, then do their own thing" is the No.1 threat identified by the DMC community. Planners, needless to say, don't see it this way at all, and for them the biggest threat to DMCs is the pure and simple fact that some events — predominantly meetings — don't actually require DMC services at all. Both parties agree substantially on other threats, such as the creeping tendency for hotels to create their own in-house DMC or the fact that the Internet, as an Oracle-like source of all knowledge, in effect performs as a disintermediator — aka a factor that eliminates an intermediary in a transaction between two parties, e.g., the planner and the DMC.

DMCs are insecure

The researchers then applied social-exchange theory to the DMC/meeting planner relationship to evaluate levels of mutual commitment and thus assess the relative strength and stability of the relationship. Nine different measurement items were analyzed, including communication, social dependence and opportunistic behavior. The recurring theme here is undoubtedly the pathological insecurity of the DMC that believes it is significantly more committed to the relationship than the meeting planner is, a contention not supported at all by the data from the meeting planner survey.

Arrogant, insecure, paranoid, persecuted and…unresponsive

The research paper sets out with the lofty ambition of assisting DMCs to "develop a new business model by redesigning their value proposition." Sadly it doesn't come near to achieving this worthy aim. but admits as much in a note towards the end of the presentation. Amongst the reasons given, it flags the small samples for the focus groups and national surveys and the extremely poor response rates to questionnaires (for example, reps from only half of the 10 DMCs that had agreed to participate in the live focus group actually turned up, an extremely poor reflection on the professionalism of our sector).

Despite the skittish insecurity of the DMC, the study, overall, reveals a stable relationship between meeting planners and DMCs and a definite appreciation on the part of the planner around the value of the DMC. It's when you drill down into the findings that you uncover a minor psychosis on the part of the DMC that doesn't believe it is appreciated (it is VERY much appreciated), and which thinks the meeting planner is about to walk out of the relationship into the arms of another DMC (it's not going to happen), and which is unable to accept the independence of the meeting planner, realizing that sometimes the meeting planner doesn't need a DMC at all.

Pádraic Gilligan is managing partner at SoolNua, a boutique agency working with destinations, venues, hotels and DMCs (!) on strategy, marketing and training for the MICE market.